Indonesia Treasury Management Profile 2018 - Together we thrive - HSBC Group
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Indonesia
Treasury Management
Profile 2018
Together we thrive
2 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 3
Contents Introduction and
Purpose
Introduction and Purpose 3 Indonesia
This is one of a series of Treasury Management Profiles designed for finance and treasury professionals worldwide. By providing a
Legal and Regulatory 6 snapshot of banking, payments and cash management in selected locations, these profiles can help treasury managers to make
informed decisions, manage risks effectively and take advantage of new opportunities. However, this information is not intended to
Taxation10 be comprehensive and does not constitute financial, legal, tax or other professional advice. Accordingly you should not act upon the
information contained in this document without obtaining your own independent professional advice. The materials contained in this
Banking15
document were assembled in May 2017 (unless otherwise dated) and were based on the law enforceable and information available
Payment Instruments 16 at that time.
Payment Systems 20
Facts and Figures
Cash Management 23 Capital/Other major cities: Jakarta/Surabaya, Medan, National holidays: 2019 — 1 Jan, 5 Feb, 7* Mar,
Bandung, Semarang Source: www.goodbusinessday.com. 3*, 19 Apr, 1, 20*, 30 May,
Electronic Banking 24
1, 5*, 6* Jun, 12*, 17 Aug,
Area: 1,904,569km2
1 Sep*, 10 Nov*, 25 Dec
Trade Finance 26
Population: 258.32m
Useful Websites 28 Languages: Bahasa Indonesia (official), Business hours: 08:00/09:00–16:00/17:00
English, local dialects (Mon–Fri)
Currency: Indonesian rupiah (IDR) Banking hours: 08:00–15:00 (Mon–Fri)
Country telephone code: 62 Stock exchange: Indonesia Stock Exchange (IDX)
Weekend: Saturday and Sunday Leading share indices: JSX Composite, Jakarta Islamic
index (JII)
National holidays: 2018 — 1 Jan, 16 Feb,
Source: www.goodbusinessday.com. 17*, 30 Mar, 14 Apr*, Sectoral distribution Agriculture 13.7%,
1, 10, 30* May, 1, 15*, 16* Jun, of GDP (% of GDP): Industry 40.3%,
Source: https://www.cia.gov/library/
17, 22* Aug, 12 Sep*, 21 Nov*, Services 46% (2016 estimate)
publications/resources/the-world-
25 Dec factbook/index.html.
* The date shown may vary by plus or minus one day. These dates are derived by converting from a non‑Gregorian calendar (e.g., Muslim or Hindu) to the Gregorian
calendar. Some of these dates cannot be determined in advance with absolute accuracy, even by the governing authorities. In the case of Muslim dates in particular, the
feast days are determined by the sighting of a new/full moon.
Government ®® House of Regional Representatives: 132 members are directly
Legislature elected to serve one five‑year term.
Presidential republic with a bicameral People’s Consultative
Assembly (Majelis Permusyawaratan Rakyat) composed of The next general election is scheduled to be held in 2019.
the House of People’s Representatives (Dewan Perwakilan
Rakyat) and the House of Regional Representatives (Dewan Head of state and political leader
Perwakilan Daerah). Joko Widodo, president (head of state and government) since 20
October 2014.
®® House of People’s Representatives: 560 members are elected
to serve five-year terms. ®® The president is elected every five years. The next presidential
elections are scheduled to be held in September 2019.
4 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 5
Country credit rating
Fitch Ratings rates Indonesia for issuer default as:
Term Issuer Default Rating
Short F3
Long BBB –
Long-term rating outlook Positive
Source: www.fitchratings.com, October 2017.
Exchange rate & Interest rate (%) Consumer inflation & GDP volume growth (%)
Economy Indonesia Indonesia
2017
2010 2011 2012 2013 2014 2015 2016 16,000 16,000 6.5 6.5
Q1 Q2 Q3
Exchange rate* (IDR/USD)** 9,090.4 8,770.4 9,386.6 10,461.2 11,865.2 13,389.4 13,308.3 13,348.4 13,309.3 13,329.1
12,000 12,000 5.5 5.5
Interest rate (MMR)** (%) 6.01 5.62 4.01 4.83 5.85 5.83 4.80 NA NA NA
Unemployment (%) 7.3 6.7 6.2 5.9 5.8 6.0 5.6 NA NA NA 8,000 8,000 4.5 4.5
Consumer inflation*** (%) + 5.1 + 5.4 + 4.3 + 6.4 + 6.4 + 6.4 + 3.5 + 3.6 + 4.3 + 3.8
4,000 4,000 3.5 3.5
GDP volume growth*** (%) + 6.2 + 6.2 + 6.0 + 5.6 + 5.0 + 4.9 + 5.0 + 5.00 NA NA
GDP (IDR tr) 6,447 7,832 8,616 9,546 10,566 11,541 12,407 – – – 00.0 00.0 2.5 2.5
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
GDP (USD bn) 709 893 918 913 890 862 932 – – –
Exchange rate (INR/USD) Consumer inflation %
GDP per capita (USD) 2,947 3,663 3,701 3,632 3,500 3,347 3,569 – – –
Interest rate (MMR) GDP volume growth %
BoP (goods/services/income) as % GDP + 0.1 – 0.3 – 3.1 – 3.6 – 3.7 – 2.7 – 2.2 – – –
* Official rate. ** Period average. ** Year on year. Sources: IMF, International Financial Statistics, November 2017 and 2017 Yearbook. Sources: IMF, International Financial Statistics, November 2017 and 2017 Yearbook.
6 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 7
Legal and
Regulatory
Non-resident Central bank Reporting transactions; domestic currency transfers to an account held by a
Bank Indonesia is an autonomous institution operating in All transactions between residents and non-residents must non-resident (or jointly held account) and a resident at a domestic
accordance with Act No 23 of 1999 of the Republic of Indonesia be reported to Bank Indonesia on a monthly basis. Resident or foreign bank, except for economic activities in Indonesia; or
bank accounts (the Central Bank Law) and its amendments. companies must also report all transactions on resident foreign
exchange accounts held abroad no later than the 15th day of the
between accounts held by the same non-resident.
Resident banks are not permitted to grant credit to non-residents
Bank supervision
are permitted in
subsequent month.
The Financial Service Authority (OJK) supervises the banking unless they are a lending syndication led by an offshore prime
sector in Indonesia. Non-financial companies must report all foreign exchange bank or the lending is in the form of credit cards or personal loans
both foreign and
transactions below USD 1,000, or its equivalent, on an that are to be utilised domestically.
Resident/non-resident status aggregated basis. Payments above USD 1,000, or its equivalent,
A company is considered resident in Indonesia if it is incorporated must be reported individually. All details of netting and/ Foreign currency purchased against the IDR must be supported
domestic currency. in or domiciled in Indonesia. or offsetting funds with affiliate companies abroad must be by an underlying economic transaction if it exceeds USD 100,000
reported. per month.
Bank accounts
Non-residents are Resident
Foreign exchange accounts can be held by residents both
Reporting requirements apply to all companies with total assets
in excess of IDR 100 billion or annual sales in excess of
All capital transactions are regulated by Bank Indonesia and the
Commercial Offshore Loan Team (COLT). All borrowing activities
must be reported.
domestically and abroad. No cheques may be drawn on foreign
restricted to holding
IDR 100 billion.
exchange accounts. Resident domestic currency (IDR) accounts
cannot be held abroad, but are freely convertible into foreign Banks are responsible for submitting transactions data to Bank A customs declaration and prior approval from Bank Indonesia
is required to import or export over IDR 100 million in domestic
current, savings
currency. Indonesia on behalf of their clients, although the accuracy of all
reported information remains the client’s responsibility. Data is currency banknotes.
Non-resident submitted via monthly Foreign Exchange Flow (FEF) reports.
and time deposit
Non-resident bank accounts are permitted in both foreign and All export proceeds must be received via a foreign exchange bank,
domestic currency. Non-residents are restricted to holding Exchange controls although there is no obligation to keep these funds in a domestic
current, savings and time deposit accounts. Non-resident The Indonesian rupiah (IDR) is Indonesia’s official currency. bank and no restriction on subsequent transfers abroad. Profits
accounts. domestic currency accounts are freely convertible into foreign
currency. ®® Foreign exchange controls are administered by
earned abroad are not required to be remitted back to Indonesia.
Non-resident investment in infrastructure projects such as power
Bank Indonesia. There are limited exchange controls; the IDR is
A transfer in IDR to a non-resident account is only permitted freely convertible. and electricity generation, shipping, airlines, telecommunications,
as part of an underlying economic transaction. Non-residents railways and seaports should be made via joint-venture
must submit statements to their banks in order to receive such Forward contracts against IDR offered by domestic banks to companies with a minimum 5% Indonesian ownership. Non-
payments. non‑residents are restricted to a maximum value of USD 1 million, resident investment in banks is limited to 99%.Non-resident
unless there is some underlying investment activity. investment in other sectors can be 100%.
Interest can be offered on current accounts. Overdraft facilities
are available to resident entities only. Onshore banks in Indonesia are prohibited from carrying out Indonesia is a member of the Association of Southeast Asian
certain transactions with non-residents including: the provision of Nations (ASEAN), and a participant in the ASEAN Swap
overdrafts; the placement of domestic currency funds; purchases Arrangement and the Bilateral Swap Arrangements under
of most non‑resident issued domestic currency securities, ASEAN+3.
with the exception of securities related to import or export8 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 9
Anti-money laundering/counter-terrorist financing1 is being opened solely for the purpose of paying salaries. Banks
Indonesia has implemented anti-money laundering and counter- must identify the customer’s profile, business activities and
terrorist financing legislation. Notable legislation includes: ownership structure, as well as any other information that may
be used to measure the risk level of the customer. They must
®® Law No 1 of 2002 on Eradication of Terrorism; also conduct ongoing monitoring of the relationship, including
®® Law No 8 of 2010 Concerning the Prevention and Eradication ensuring that transactions are consistent with the customer’s
of the Crime of Money Laundering; business and risk profile.
®® Law on Amendment of Article 3, Article 29 and Article 30 of
the Law on Anti-Money Laundering and Combating Financing Cash transactions exceeding IDR 500 million, or a series of
of Terrorism 2013; transactions aggregating to a value above IDR 500 million, or its
®® Sub‑Decree on Freezing of Property of Designated Terrorists equivalent in foreign currency, within one business day, must be
and Organisations 2014; and reported to the PPATK.
®® Government Regulation No 43 of 2015. Financial institutions in the broadest sense must record and
report suspicious transactions within three working days of their
A number of Ministry of Finance decrees and Bank Indonesia
discovery to the PPATK.
regulations have also been issued, including the Regulation
Concerning the Implementation of Anti-Money Laundering All records must be kept for a minimum of five years after the end
and Combatting the Financing of Terrorism Programme for of the business relationship.
Commercial Banks 2009. The Supreme Court has also issued
related Circulars. All cross-border currency transactions must be reported to the
Directorate General of Customs and Excise. Individuals carrying
Indonesia is a member of the Asia/Pacific Group on Money cash and/or other negotiable instruments of IDR 100 million or
Laundering (APG). The Indonesian Financial Transaction Reports more into or out of Indonesia must also declare this to customs.
and Analysis Centre (PPATK), the country’s financial intelligence
unit, is a member of the Egmont Group.
Account opening procedures require formal identification of the
account holder and beneficial owners. However, precise due
diligence requirements vary between sectors.
Banks must apply customer due diligence procedures when
engaging in business relationships, including with ‘walk-in
customers’ when the transaction is equal to or greater than IDR
100 million. Simplified due diligence procedures apply in some
instances, such as if a company is publicly listed, or if an account
1.
Data as at January 2017.10 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 11
Taxation
1
Resident/non-resident Resident companies deriving income from foreign sources are
Withholding tax (subject to tax treaties)
Companies incorporated or domiciled in Indonesia are resident for entitled to a unilateral tax credit with respect to foreign tax paid
tax purposes. Foreign companies that are not legally resident in on the income. The credit is limited to the amount of Indonesian Technical
Payments to: Interest Dividends Royalties Branch remittances
Indonesia, yet have a permanent establishment (PE) in Indonesia, tax payable. service fees
are taxed on their profits as if they were resident.
Dividends received or derived by a resident company from Resident companies 15%/20% 10%/15% 15% 2–10% NA
Tax authority a participation in an Indonesian limited liability company are Non-resident companies *
20% 20% 20% 20% 20%
®® Director General of Taxation. exempt from tax if the recipient holds at least 25% of the shares
* May be subject to reduced rates under tax treaties, subject to submission of forms DGT-1 or DGT-2.
of the payer and the dividends are distributed from retained
Tax year/filing earnings.
The tax year is the calendar year. Businesses may elect to
substitute their financial year, but it must be exactly 12 months Losses can be carried forward for a maximum of five years (up ®® Up to a 50% corporate income tax reduction for taxpayers Capital gains tax
long. to ten years for some industries or remote locations that have in the telecommunications, information and communication Capital gains are taxable as ordinary income and capital losses
obtained government approval in relation to tax incentives). sectors that introduce high technology with a minimum are tax-deductible. Gains from certain transactions are taxed
The monthly tax instalment system is a self-assessment system, Losses cannot be carried back. under a special regime (e.g. gains from the disposal of land and/
investment value of IDR 500 billion, but less than IDR 1 trillion;
with tax due on the 15th day of the calendar month following the or buildings are subject to a final tax of 5% of the transaction
and
tax assessment month. Monthly tax returns must be filed by the Tax incentives are available to entities with capital investments value).
®® A tax holiday period, from a minimum of five years to a
20th day of the following month. Annual corporate tax returns in certain approved industry sectors and those operating in
maximum of 15 years from the commencement of commercial
must be filed within four months of the end of the book year. certain geographic sectors if certain conditions are satisfied. Withholding tax (subject to tax treaties)
operations. A tax holiday period up to 20 years is possible,
Incentives include a 30% tax investment allowance (5% per year), Dividends paid to a non-resident are subject to a 20% withholding
Consolidated returns are not permitted and each company must subject to the discretion of the Ministry of Finance, depending
accelerated depreciation, the carryforward of losses up to ten tax (which is considered a final tax), unless the rate is reduced
file a separate return. on the competitiveness and strategic value of the industry.
years, and a reduced withholding tax rate of 10% on dividends under a tax treaty. Dividends paid by a domestic corporate
paid to non-residents. An income tax reduction of 5% may be A temporary tax incentive is available until 31 December 2016 for taxpayer to a resident company are subject to a 15% withholding
Corporate taxation available to companies listed on the Indonesian stock exchange, taxpayers who wish to revalue their fixed assets for tax purposes. tax (unless the participation exemption applies), which represents
Resident companies are taxed on their worldwide income. Non- if certain conditions are satisfied. Taxpayers that apply for a revaluation will be subject to a reduced an advance payment of tax liability. A 10% final withholding tax is
resident companies are only taxed on their Indonesian-sourced
final income tax rate of 4% or 6% (the normal rate is 10%) on imposed on dividends paid to a resident individual.
income, including income attributable to a PE in the country. A tax holiday regime is available for new domestic or foreign
the difference between the post-revaluation asset value and
investment in specified business sectors (e.g. pioneer Interest paid by a domestic taxpayer to a resident generally is
As from 1 July 2013, a corporate taxpayer (other than a PE) the tax book value prior to revaluation, with the applicable rate
industries), but companies that use this regime are not entitled subject to a 15% withholding tax, which represents an advance
that earns or receives gross income below IDR 4.8 billion within depending on when the application is submitted and the income
to the other tax incentives mentioned above. Qualifying payment of tax liability. Interest paid by a bank in Indonesia to a
a fiscal year is subject to a reduced corporate income tax of tax due is settled.
manufacturing projects in high priority sectors (i.e. base metals, tax resident is subject to a 20% final withholding tax.
1% of gross income. Resident corporate taxpayers with gross oil refining/petrochemicals, machinery, renewable energy and
revenue between IDR 4.8 billion and IDR 50 billion receive a Advance tax ruling availability
telecommunications equipment) are granted the following The Minister of Finance and the Director General of Taxation may A 20% withholding tax is payable on branch profits after
50% reduction in the corporate tax rate imposed on the taxable incentives: corporation tax, irrespective of whether they are remitted, unless
income for gross revenue up to IDR 4.8 billion. There is no surtax issue rulings in certain cases, such as the determination of a debt-
to-equity ratio or on the tax effects of a proposed transaction. they are reinvested in Indonesia.
or alternative minimum tax. ®® A 10% to 100% reduction in corporate income tax liability for a
minimum investment of IDR 1 trillion; Certain services (including consulting, management and technical
services) attract a withholding tax of 2%. In the event the service
is performed by a non‑tax resident, withholding tax is usually
1.
All tax information supplied by Deloitte Touche Tohmatsu (www.deloitte.com) and 20%.
Deloitte Highlight, 2017.12 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 13
Indonesia has no specific tax rules for
cash pooling arrangements. Hence, the
tax treatment would follow the general
principles of the income tax law.
Tax treaties/tax information exchange agreements (TIEAs) Certain disposals of land and/or buildings are subject to a final tax Sales taxes/VAT and excise duties Financial transactions/banking services tax
Indonesia has exchange of information relationships with 77 of 2.5% of the transaction value. VAT is levied at a rate of 10% on the sale of taxable goods and The sale of shares listed on the Indonesian stock exchange
jurisdictions through 71 double tax treaties and six TIEAs. services. Imports are subject to VAT; exports of taxable goods are are subject to a final tax of 0.1% of the transaction value. An
Transfers of land and the titles of buildings are taxed at 5% by the zero rated. additional tax of 0.5% applies to the share value of founder shares
Indonesia is a signatory of the Multilateral Competent Authority transferor on the higher of the market value or the deemed sales at the time of a initial public offering.
Agreement on the automatic exchange of country-by-country value, as determined by the government. VAT also applies to intangible goods (including royalties) and to
financial account information. Under this multilateral agreement, virtually all services provided outside Indonesia to Indonesian The transfer of the shares of an unlisted resident company is
information will be exchanged between tax administrations, Controlled foreign companies businesses. In addition to VAT, some goods are subject to a luxury subject to withholding tax of 5% of the transfer value, unless an
giving them a single, global picture on some key indicators of The Ministry of Finance is authorised to determine when a sales goods tax (LST) at rates of 10% to 200%. exemption applies under a tax treaty.
economic activity within multinational enterprises. dividend is deemed to be derived from a foreign company
established in another country, where an Indonesian resident A number of goods (such as basic necessities) and services Payroll and social security taxes
Thin capitalisation taxpayer holds at least 50% of the paid-up capital of the foreign (including food served in restaurants, health care, financial There is no payroll tax payable by employers. Employers are
Starting from fiscal year 2016, a certain portion of interest arising company or, together with other resident taxpayers, holds at services and hotels) are exempt from VAT. required to withhold income tax on any payments made to
from debt is non-deductible for tax purposes, if the taxpayer’s least 50% of the paid-up capital. This applies only if the foreign employees.
debt-to-equity ration exceeds 4:1 (except for certain industries). company does not trade its shares on the stock exchange. If no The following financial services are exempted from VAT:
dividends are declared or derived from the offshore company, the An employer must contribute the following to Indonesia’s social
The general law authorises the Ministry of Finance to determine resident taxpayer must calculate and report the deemed dividend ®® Financial services that accumulate funds from the public, such security system if it employs ten or more individuals, or maintains
the debt-to-equity ratio of companies for tax calculation purposes. in its tax return; otherwise, the Ministry of Finance will do so. as current accounts, time deposits, certificates of deposit, payroll expense of at least IDR 1 million per month:
There are no thin capitalisation rules. savings, and/or any other form that is equivalent to it;
The dividend is deemed to be derived either in the fourth month ®® Financial services that place funds, borrow funds or lend funds ®® Workers’ accident compensation: 0.24% to 1.74%, with
Transfer pricing following the deadline for filing the tax return in the foreign to other parties using mail, telecommunication infrastructure the rate dependent upon the type of industry in which the
Transactions between parties that have a special relationship country, or seven months after the offshore company’s tax year or notes, cheques and other means; employer is engaged;
must be carried out in a ‘commercially justifiable way’ and on ends, if the country does not have a specific tax filing deadline. ®® Financial services, including financing based on Islamic ®® Workers’ old age compensation: 3.7%, which is supplemented
an arm’s-length basis. Documentation is required, which should principles, such as leasing with a right option, factoring, credit by a 2% contribution made by the individual employee,
include an overview of the taxpayer’s business operations and Disclosure requirements cards business, consumer finance, lending services on the resulting in a total contribution of 5.7%;
structure, its transfer pricing policy, a comparability analysis, A taxpayer must provide certain information regarding transfer basis of legal liens, including liens and fiduciary sharia; and ®® Workers’ death compensation: 0.3%; and
selected comparables and an explanation of how the arm’s- pricing transactions with related parties in an attachment to the ®® Underwriting and insurance services. ®® Workers’ health compensation: 4%.
length price or profit was determined (including the transfer annual tax return. The information will be maintained by the tax
pricing methodology). The Indonesian tax authorities have issued authorities and may be tested by tax auditors in the course of a Excise duties are levied on petrol, cigarettes and alcohol, at
detailed transfer pricing guidelines, which, in principle, are in line tax audit. various rates.
with the OECD’s approach.
Stamp duty Entrepreneurs exceeding a certain amount in annual sales of
Land and buildings tax Certain documents are subject to stamp duty at a nominal taxable goods and/or taxable services are required to register for
Land and building tax is payable annually on land, buildings amount of IDR 3,000 or IDR 6,000. VAT purposes and issue a VAT invoice on the delivery of taxable
and permanent structures. The rate typically is not more than goods and/or taxable services.
0.3% of the sale value of the property. The land and building Cash pooling
tax for certain businesses (i.e. oil and gas, geothermal, mining, Indonesia has no specific tax rules for cash pooling
plantation forestry) is regulated under a specific regime. arrangements. Hence, the tax treatment would follow the general
principles of the income tax law.14 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 15
Banking
Overview
Major banks
There are 118 commercial banks operating in Indonesia, including
four state‑owned commercial banks, 78 domestic privately Total assets (USD billions)
Bank
owned commercial banks, 26 regional government banks and 12 30 June 2017
privately owned Islamic banks. There are also ten foreign-owned
Bank Mandiri 82,084
banks and approximately 1,643 rural credit banks1.
Bank Rakyat Indonesia 79,002
Indonesia’s banking sector is dominated by four banks, which
control over 52% of the banking sector’s total assets. Three of Bank Central Asia 56,768
the banks – Bank Mandiri, Bank Rakyat Indonesia and Bank Bank Negara Indonesia 48,581
Negara Indonesia – are majority state owned. In 2016, Indonesia
announced plans to form a holding company that will manage its Bank CIMB Niaga 18,596
four state-controlled banks (including Bank Tabungan Negara). Source: www.accuity.com, October 2017.
Islamic banking has developed rapidly in Indonesia over the past
decade. In addition to the 12 privately owned Islamic banks, there
are 22 Islamic banking units of conventional banks providing In 2017, the Development Bank of Singapore (DBS) announced it
Islamic banking services. The Islamic banking sector accounts for would be launching a mobile-only bank in Indonesia to promote a
approximately 5% of the banking sector’s total assets. more digital, branchless and signature-less service in the market.
Plans to create an Islamic ‘megabank’ by merging the Shariah- There are ten foreign-owned banks operating in Indonesia. Only
compliant units of Bank Mandiri, Bank Negara Indonesia, Bank those foreign banks ranked as one of the world’s top 200 global
Rakyat Indonesia and Bank Tabungan Negara have been put on banks in terms of assets are permitted to establish operations
hold; in 2017, the OJK, Indonesia’s financial regulator, said that in the country (top 300 for foreign banks opening representative
consolidation of the banks would only be realised when there is offices). Existing laws allow foreign banks to establish operations
certainty of the establishment of a holding company owned by in the country by opening a branch, acquiring or merging with
State Enterprise Mlik Negara (BUMN). local banks and by opening representative offices (these are
restricted from offering bank services). There are 19 joint ventures
The traditional branch network remains a strong feature between foreign and domestic institutions.
of Indonesia’s banking landscape. However, the digital
transformation of the banking sector is underway, with increased In March 2017, Bank Indonesia approved the merger of PT Bank
investment in electronic banking and mobile payment apps. The Windu Kentjana (MCOR) and PT Bank Antardaerah (Bank Anda)
Indonesian government is keen to promote mobile banking as with Bank China Construction Bank Indonesia. The merger is
a means of reaching the 65% of the population without bank expected to be completed before the end of 2017. In May 2017,
accounts. HSBC and PT Bank Ekonomi Raharja officially merged. The
merged entity will be known as PT Bank HSBC Indonesia.
Indonesia is implementing Basel III regulations for commercial
banks. Full implementation is expected by 2019.
1.
Bank Indonesia.16 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 17
Payment
Instruments
Bank Indonesia Cash
Cash remains an important payment medium in Indonesia,
particularly for low‑value retail transactions.
Payment statistics
Millions of transactions Traffic (IDR billions)
is in the process
% change % change
2015 2016 2016/2015 2015 2016 2016/2015
Credit transfers
All credit transfers in Indonesia are automated.
of developing a
Cheques and bilyet giro 41.7 43.0 3.1 1,607,298.4 1,791,488.8 11.5
®® High-value (equal to or above IDR 100 million) and urgent Debit cards 4,574.4 5,196.5 13.6 4,897.7 5,623.9 14.8
National Payment
credit transfers are cleared and settled via BI‑RTGS, the
Credit cards 280.5 305.1 8.8 281,325 281,020 – 0.1
national RTGS system, on a same-day basis. All transactions of
IDR 500 million or above must be processed via the BI-RTGS. High-value credit transfers 11.0 7.7 – 30 112,845.4 111,827.3 – 0.9
Gateway in order to ®® Low-value (below IDR 500 million) and high-volume credit
transfers are processed via the Credit Clearing element of the
Low-value credit transfers 182.6 205.2 12.4 4,710.3 6,416.2 36.2
Source: Bank Indonesia, May 2017.
SKNBI. Funds are available on a same-day or next working-day
process electronic basis. Low-value credit transfers include payroll, supplier and
third-party payments.
payments, including Credit (and debit) transfers accounted for approximately 5% of
the volume of all cashless payments in 2016, and 3.8% of the
Card payments
Payment cards, particularly debit cards, are a popular method
Three domestic ATM networks (Bersama, Prima and ALTO)
and two international ATM networks (Cirrus and Plus) operate
ATM transactions,
volume1. of payment in Indonesia. They accounted for approximately in Indonesia. Transactions at domestic ATMs are carried out in
95% of the volume of all cashless payments in 2016 (debit real time, with final settlement taking place through BI-RTGS.
Direct debits cards accounted for 90%). The value of debit card transactions Transactions at Cirrus and Plus ATMs are cleared by MasterCard
within the country. There is currently no standard interbank system in Indonesia for over the same period was negligible (0.2%), while credit cards and Visa.
direct debits. A direct debit is only possible if the originator and transactions accounted for 12.8% of the value1.
receiver have an account in the same bank. POS transactions are carried out via two POS networks, the Debit
There were approximately 142 million debit cards and 17.7 BCA network and Kartuku. All ATMs and POS terminals are EMV-
Cheques million credit cards in circulation at the end of April 2017. There compliant.
The cheque is a popular cashless payment instrument, were also 8.2 million ATM cards1.
particularly for commercial payments. Bilyet giros, which cannot Bank Indonesia is in the process of developing a National
be exchanged for cash, are also available. Sixty-five banks issue debit cards in Indonesia, 24 issue credit Payment Gateway in order to process electronic payments within
cards and 113 issue ATM cards. Visa, MasterCard and JCB the country. The new system will be applied to ATM debit and
Cheques must be presented for payment within 70 days of their International are the principal credit card brands issued. All credit card transactions as well as to electronic transfers.
issue. Post‑dated cheques are permitted. cards issued are EMV-compliant.
The Asian Payment Network (APN) initiative currently allows ATM
Cheques and bilyet giros are cleared via the Debit Clearing There are four credit card clearing operators in Indonesia (JCB card holders in Indonesia to perform cash withdrawals at the
element of the SKNBI. Final settlement is via BI-RTGS. Funds are International, MasterCard Indonesia, Visa Worldwide Indonesia ATMs of participating banks in each member country (Australia,
available to beneficiaries on a next working-day basis. and Rintis Sejahtera) and five ATM and debit card clearing China, Japan, Indonesia, Malaysia, New Zealand, the Philippines,
operators (Artajasa Pembayaran Elektronis, Daya Network Singapore, South Korea, Thailand and Vietnam), through a linked
Cheques accounted for just 0.7% of the volume of all cashless Lestari, Rintis Sejahtera, MasterCard Indonesia and Visa ATM network. The APN’s aim is to become a settlement network
payments in 2016, but 81.6%% of the value1. Worldwide Indonesia).18 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 19
for a range of retail payments across Asia. In Indonesia, the
initiative is operated by PT Alto Network, PT Artajasa Pembayaran % volume of all
Elektronis and PT Rintis Sejahtera. cashless payments 2016
Electronic wallets
Electronic money schemes are available in the form of reloadable
pre-paid cards. Credit Transfers 5.0%
Debit Cards 90.0%
There were 603.9 million electronic wallet transactions in Credit Cards 5.0%
Indonesia in 2016, with a total value of IDR 7.1 trillion. This was Cheques 0.7%
an increase of 12.8% and 34% respectively on 2015 figures1.
Unregistered e-money cards have a maximum value threshold of
IDR 1 million. Registered e-money cards have a value threshold of
IDR 5 million. There is a monthly limit of IDR 20 million for
e-money transactions. % value of all
cashless payments 2016
There are 23 institutions currently offering e-money schemes
in Indonesia. Recent measures by Indonesia’s central bank to
promote the use of electronic money include the implementation
of electronic parking transactions (e-Parking) and the launch of
Credit Transfers 3.8%
the Bandung Smart Card.
Debit Cards 0.2%
Credit Cards 12.8%
Mobile wallet payment schemes such as Bank Central Asia’s
Cheques 81.6%
Sakuku service and telecoms operators Telkomsel’s T-Cash and
Indosat Ooredoo’s Dompetku are available and increasingly
popular. Source: Bank Indonesia.
In 2016, the transaction value of mobile wallet payments
increased 88.9% on 2015 figures, to USD 893 million2.
Other payments
Postal money orders are offered by the Indonesian post office,
Pos Indonesia, across its sizeable nationwide branch network.
1.
Bank Indonesia.
2.
Research and Markets: Indonesia Mobile Wallet and Payment Market Opportunities
(Databook Series) - Market Size and Forecast (2015-2021) by Mobile Commerce, P2P
transfer, Bill Payment, Retail Spend, Consumer Attitude & Behaviour, and Market Risk.20 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 21
Payment
Systems
BI-RTGS processes Type
BI-RTGS, Indonesia’s national interbank real-time gross
settlement (RTGS) system, is operated by Bank Indonesia.
Clearing cycle details
BI-RTGS
Currency centre holidays
2018 1 Jan, 16 Feb, 17*, 30 Mar, 14 Apr*,
high-value and ®® BI-RTGS processed 7.7 million payments in 2016, with a value
BI-RTGS settles transactions in real time. Settlement takes place
across the participant banks’ correspondent accounts held at
1, 10, 30* May, 1, 15*, 16* Jun,
17, 22* Aug, 12 Sep*, 21 Nov*, 25 Dec
of IDR 111.8 trillion, a decrease of 1% and 30% respectively on Bank Indonesia.
urgent interbank 2015 figures1.
®® 16:30 WIB: cut-off time for third-party payments.
2019 1 Jan, 5 Feb, 7* Mar, 3*, 19 Apr,
1, 20*, 30 May, 1, 5*, 6* Jun,
12*, 17 Aug, 1 Sep*, 10 Nov*, 25 Dec
credit and debit
The SKNBI, Indonesia’s national automated clearing system, ®® 17:00 WIB: cut-off time for interbank transfers. The interbank
is operated by Bank Indonesia. The SKNBI is divided into two transfers are processed by online computer connections with * The date shown may vary by plus or minus one day. These dates are derived by
subsystems: Bank Indonesia. converting from a non-Gregorian calendar (e.g., Muslim or Hindu) to the Gregorian
transfers. All
calendar. Some of these dates cannot be determined in advance with absolute
®® Credit Clearing for all low-value credit transfers; and accuracy, even by the governing authorities. In the case of Muslim dates in particular,
SKNBI Credit Clearing the feast days are determined by the sighting of a new/full moon.
®® Debit Clearing for all paper-based payments including direct Credit payments are processed in two daily clearing cycles: 06:30
transactions of debits and cheques.
®® SKNBI processed 113.5 million transactions in 2015, with a
to 11:45 and 12:45 to 16:30 WIB. Source: www.goodbusinessday.com.
®® 16:30: cut-off time for data to be submitted to the central
IDR 500 million
value of IDR 3.2 trillion, a 5.5% and 13.1% increase on 2014
figures respectively2. clearing computer. Data is transmitted online via dedicated
terminal, offline or on disc or CD.
or above must be
Participants
All banks in Indonesia participate in BI-RTGS and SKNBI. Final settlement takes place in participants’ accounts held at Bank
Indonesia via BI-RTGS. Funds are available on a same-day or next
processed via the Transaction types processed working-day basis.
BI-RTGS processes high-value (equal to or above IDR 100 million)
and urgent IDR-denominated interbank credit and debit transfers. SKNBI Debit Clearing
BI-RTGS. All transactions of IDR 500 million or above must be processed
via the BI-RTGS. In addition, BI-RTGS effects the final settlement
Debit payments are processed in one clearing cycle each day
between 06:30 and 17:00.
of participants’ net balances originating from the SKNBI.
Payments are processed either via an automated magnetic
The SKNBI processes low-value (below IDR 500 million), image-reading system or manually. The local clearing operator
non-urgent and bulk electronic credit and debits and all paper- collates all the data that is submitted to the central clearing
based payments. computer for national clearing.
Operating hours ®® 17:00 WIB: cut-off time for data to be submitted to the central
BI-RTGS operates from 06:30 to 19:00 WIB, Monday to Friday. clearing computer.
The SKNBI operates 06:30 to 20:00 WIB, Monday to Friday. Final settlement takes place in participants’ accounts held at Bank
Indonesia via BI-RTGS. Funds are available on a same or next
working-day basis.
1.
Bank Indonesia, Payment System statistics.
2.
Bank Indonesia, 2015 Annual Report.22 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 23
Cash
Management
Domestic ®® Certificates of deposit are offered by commercial banks, with
Notional pooling maturities ranging from one week to one year.
Notional pooling is permitted for resident companies and offered ®® Bank Indonesia auctions Sertifikat Bank Indonesia (SBI) on a
by a number of leading international banks. weekly basis, with maturities of one, three, six and
12 months. SBIs are issued in denominations of
Non-residents are not permitted to participate in cash IDR 1 million.
concentration structures because of the borrowing restrictions
®® Repurchase agreements are available in INR and foreign
placed upon them.
currency.
Cash concentration ®® Money market funds are widely available.
Cash concentration is permitted for resident companies and ®® Banker’s acceptances are available in Indonesia but not
offered by a number of leading international banks. commonly used by companies.
Non-residents are not permitted to participate in cash Custody and securities settlement1
concentration structures because of the borrowing restrictions Depositories
placed upon them. ®® Bank Indonesia.
®® Indonesian Central Securities Depository (KSEI).
Cross-border sweeping is permitted for resident entities.
The Indonesian Clearing and Guarantee Corporation (KPEI) is
Collections the clearing house for all securities traded on the Indonesia
Banks in Indonesia offer a range of collections options to Stock Exchange (IDX).
corporate clients, including lockbox and regular cash and cheque
collection services. The KSEI provides central registration of securities and operates
a book-entry settlement system. Settlement takes place on a
Cross-border delivery-versus-payment (DVP) basis.
Cross-border payments are routed via SWIFT and settled through
accounts held with correspondent banks abroad or, in the case of For government bonds and central bank instruments, Bank
international banks, via their own networks. Indonesia acts as central securities depository and operates
the Bank Indonesia Scripless Securities Settlement System
Lifting fees (BI-SSSS), which conforms to BIS Model 1. Settlement of these
Fees are applied on funds transfers between resident and non- instruments is on a DVP-basis in BI-RTGS.
resident accounts.
BIS Model
Short-term investments ®® Model 1.
®® Interest can be earned on resident and non-resident current
and demand deposit accounts. Settlement cycle
®® Time deposits are available in IDR or major foreign currencies, ®® T+3 for equities.
with maturities of one month to two years. ®® T+2 for income securities.
1.
Data as at February 2017.24 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 25
Electronic
Banking
Six banks provide Electronic banking is available in Indonesia and offered by the
majority of the country’s banks. There is no bank-independent
electronic banking standard; each bank offers its own proprietary
the branchless system for corporate banking purposes.
Internet and mobile banking is available in Indonesia, but
banking service, adoption rates are very low. Online transactions are conducted via
the Secure Electronic Transaction (SET) system.
Laku Pandai. The In 2015, the OJK launched a branchless banking service, Laku
Pandai. Aimed at individuals, particularly in rural areas, without
service is aimed access to banking facilities, the scheme encourages people to
manage their finances via mobile banking. Six banks currently
provide this service.
at encouraging Indonesia has an internet penetration rate of 51.8%; 47.6% of the
population access the internet through a smartphone1.
people to manage
their finances via
mobile banking.
1.
As of October 2016, Indonesian Internet Service Provider Association.26 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 27
Trade As a member of ASEAN and AFTA,
Indonesia has committed to lower
Finance inter‑regional tariffs of 0% to 5% through
the CEPT scheme. Certain goods such as
sensitive agricultural products are exempt.
Key import partners Imports Indonesia is a member of the 21-member Asia-Pacific Economic Taxes/tariffs and other fees
Documents Cooperation (APEC) forum, which intends to lift all trade and Export taxes and tariffs are applied to some products, including
In order to import goods into Indonesia, a customs declaration, investment barriers in the region. rattan, timber, cocoa and crude palm oil and its derivatives.
commercial invoice (including a full description of the imported
goods), bill of lading, packing list, cargo release order and, in Preferential duties are applied to certain items in accordance with Authorised foreign exchange banks are used to collect export
China 20.6% World Trade Organisation and AFTA regulations. Raw materials taxes.
certain cases, certificate of origin are required.
Singapore 12.6% and capital goods are subject to a 5% import tariff.
Japan 9.3% Licences Prohibited exports
Malaysia 6.0% Licences are required for all imports into Indonesia. Most goods Authorised foreign exchange banks are used to collect import A negative list (of products that may not be exported) is in
South Korea 5.9% are imported under open general licences. Agricultural products taxes. operation. It is prohibited to export certain types of low-quality or
Thailand 5.7% such as beverages, fruits and other food items are only permitted unprocessed rubber, scrap metal and culturally valuable antiques.
USA 5.3% to be imported by those designated to do so by the Ministry of Indonesia has three free trade zones, all located in the Riau
Trade. Islands: the Free Trade Zone and Free Port of Batam; the Bintan Financing imports and exports
Free Trade Zone; and the Free Trade Zone and Free Port of Imports
Taxes/tariffs and other fees Karimun. Commercial banks are generally responsible for establishing
Key export partners Indonesia is a member of the Association of Southeast Asian financing requirements for imports.
Nations (ASEAN) and the ASEAN Free Trade Area (AFTA). Prohibited imports
A negative list (of products that may not be imported) is in Exports
As a member of ASEAN and AFTA, Indonesia has committed operation. It is prohibited to import certain commodities into There are no financing requirements for exports.
to lower inter‑regional tariffs of between 0% and 5% through Indonesia, in order to protect fauna and flora, and for national
Japan 12.0% the Common Effective Preferential Tariff (CEPT) scheme. Certain security and moral reasons.
USA 10.8% goods such as sensitive agricultural products are exempt from
China 10.0% this. It is also prohibited to import rice and most second-hand items.
Singapore 8.0%
Tariffs on 99% of the products in the inclusion list of the ASEAN-6 Exports
India 7.8%
(Brunei Darussalam, Indonesia, Malaysia, the Philippines, Documents
South Korea 5.1%
Singapore and Thailand) have been reduced to no more than 5%. In order to export goods from Indonesia, a customs declaration,
Malaysia 5.1%
More than 60% of these products have zero tariffs. commercial invoice, bill of lading, packing list and, in certain
cases, certificate of origin are required.
Source: The World Factbook. Washington, DC: Central Intelligence Agency, 2017 The ASEAN-China free trade area eliminates 90% of tariff and
(https://www.cia.gov/library/publications/resources/the-world-factbook/index.html). Licences
investment barriers between China and ASEAN member states.
All exporters are obliged to acquire trade permits from the
ASEAN has established free trade agreements with Australia, Ministry of Trade.
India, Japan, New Zealand and South Korea and is negotiating a
free trade agreement with the EU. Approval from the Ministry of Trade is required in order to export
certain commodities produced in Indonesia. The export of some
of these commodities may be temporarily suspended in order to
ensure that domestic demand is met and to maintain domestic
price stability.28 HSBC Treasury Management Profile 2018 | Indonesia HSBC Treasury Management Profile 2018 | Indonesia 29
Useful
Websites
Bank Indonesia www.bi.go.id
Leading banks: Bank Central Asia www.klikbca.com
Bank CIMB Niaga www.cimbniaga.com
Bank Mandiri www.bankmandiri.co.id
Bank Negara Indonesia www.bni.co.id
Bank Rakyat Indonesia www.bri.co.id
Indonesian Banks Association www.perbanas.org
ASEAN Bankers’ Association www.aseanbankers.org
State-owned Asset Management Company www.ptppa.com
Indonesian Financial Services Association www.ifsa.or.id
Disclaimer
Ministry of Finance www.kemenkeu.go.id
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BATAM Industrial Development Authority www.batam-center.web.id representations, warranties or guarantees (express or implied) that the information in this document is complete, accurate or up to date. We will not be liable for any liabilities
arising under or in connection with the use of, or any reliance on, this document or the information contained within it. It is not intended as an offer or solicitation for business
Ministry of Trade www.kemendag.go.id to anyone in any jurisdiction. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial,
legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining your own independent professional advice. The
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